TIDMSGI
RNS Number : 1147X
Stanley Gibbons Group PLC
21 November 2017
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014
THE STANLEY GIBBONS GROUP PLC
(the "Company" or "Stanley Gibbons")
Update
SUMMARY
The Company announces that its wholly owned subsidiary Stanley
Gibbons (Guernsey) Limited ("SG Guernsey") has today had an
administration order granted. It is emphasised that the Company and
its other subsidiaries (together the "Group") are not in
administration, are not counter-party to, and are ring-fenced from,
the buy-back guarantees of SG Guernsey. Hence, the Group will be
free to continue to trade in the normal course of business without
the cash-flow burden of the buy-back guarantees.
Appointment of Administrators to Stanley Gibbons (Guernsey)
Limited
-- Following consultation with the Company and its bank, SG
Guernsey has made an application to the Royal Court of Guernsey for
an administration order ("Administration Order") in respect of SG
Guernsey and the Administration Order has today been granted in
accordance with the laws of Guernsey.
-- The effect of the Administration Order is to place the
operations of SG Guernsey, which comprises the investment division
of the group, in the hands of the appointed joint administrators
whose responsibility will now be to establish the liabilities of SG
Guernsey (including its indebtedness to the Company) and realise
the assets of that company in order to make a distribution to its
creditors.
-- SG Guernsey's current assets principally comprise
approximately GBP12.6 million of philatelic stock. SG Guernsey's
potential liabilities primarily consist of around GBP54 million
contingent liabilities relating to the buy-back guarantees (or
"investment products") that were offered by SG Guernsey (under
previous management) prior to August 2016 and a further approximate
GBP11 million of liabilities included on its balance sheet. SG
Guernsey's liabilities also include outstanding indebtedness owed
to the Company, amounting to approximately GBP6.5 million, which
will rank alongside other unsecured creditors, mainly consisting of
bank debt and payments due to holders of investment products.
-- For the year ended 31 March 2017, the investments division
which included SG Guernsey, made total sales of GBP18.8 million and
a divisional profit of GBP1.0 million, although across this period,
the investments division was cash negative due to payments made
under the investment plan buy-back obligations.
-- The Group's bank (the largest single creditor of SG Guernsey)
is aware of the application for an Administration Order and
furthermore is looking to provide support to the joint
administrators as they work through the administration process.
Trading and Banking Update
-- Total bank debt stood at approximately GBP17.1m as at 16
November 2017 and the Group continues to trade in the ordinary
course of business, notwithstanding the administration of SG
Guernsey, although trading remains subdued in large part due to
legacy issues and, in particular, a continued reduction in
investment sales.
-- As disclosed in the Company's latest annual report published
on 2 October 2017, the Company currently remains in default under
its banking facilities and is dependent upon the bank's ongoing
support, particularly in the event of material adverse short-term
cash movements. The bank has continued to demonstrate this support
to the Group in recent months and remains in constructive dialogue
around future financing.
-- The Company continues to focus on its core philatelic and
numismatic businesses and to this end has recently secured the
services of Guy Croton as Managing Director of Philately. Guy is
well respected following a 22 year career in the industry, the last
15 years at Spink, latterly as Head of The Philatelic Division.
-- To date, cash of some GBP6 million has been generated from
the sale of non-core businesses and assets. Only a further
approximately GBP1 million is estimated by the Company's board to
remain realisable from this process. Accordingly the Company
continues to examine the full array of alternative financing
options open to it, so as to provide both short-term liquidity and
future investment capital as part of its on going restructuring
process and strategic review.
Formal Sale Process ("FSP")
-- Since the FSP commenced in June 2017, it has become clear
from discussions with numerous interested parties that an offer for
the Company as a whole is unlikely to be favourable to shareholders
whilst the legacy contingent liabilities remained. However, as the
Company is not currently in dialogue with any third party regarding
a general offer for the Company's shares, the Board has today
determined to terminate the FSP.
-- As a consequence of exiting the FSP, the Company is no longer
in an offer period for the purposes of the City Code on Takeovers
and Mergers (the "Code") and potential offerors for the Company
will no longer be granted any dispensation from the requirements of
Rules 2.4(a), 2.4(b) and 2.6(a) of the Code and would be subject to
the 28 day deadline referred to in Rule 2.6(a) of the Code.
DETAIL
Administration of SG Guernsey
Further to an application made by the board of SG Guernsey, to
which the Group's bank (also the largest creditor of SG Guernsey)
did not object, an Administration Order has today been granted in
respect of SG Guernsey pursuant to Part XXI of the Companies
(Guernsey) Law 2008, as amended. Nick Vermeulen of
PricewaterhouseCoopers CI LLP and Zelf Hussain of
PricewaterhouseCoopers LLP have been appointed as joint
administrators of SG Guernsey and their primary responsibility will
now be to establish the liabilities of SG Guernsey and to realise
its assets in order to make a distribution to its creditors. The
background to the Administration Order is as follows:
-- SG Guernsey's potential liabilities primarily consist of
around GBP54 million contingent liabilities relating to the
buy-back guarantees (or "investment products") that were offered by
SG Guernsey (under previous management) prior to August 2016 and a
further approximate GBP11 million of liabilities included on its
balance sheet;
-- SG Guernsey has sought to fund any buy-backs requested by
customers from trading revenues and from funding provided to it by
the Group in the form of inter-company loans. In providing such
support, the Company's board was of the view that the investment
division remained an important element of the Group's activities
and should be supported to the extent possible;
-- although SG Guernsey has stopped offering any form of
guaranteed resale price in any of its agreements with customers,
the pre-existing guarantees remain extant;
-- in recent weeks, there have been an increasing number of
requests by investment clients of SG Guernsey to exercise their
rights under the guarantees, following GBP2.6 million of buy-back
obligations paid in the year to 31 March 2017;
-- the removal of the provision of buy-back guarantees by SG
Guernsey in August 2016 has further impacted sales and this
deterioration in SG Guernsey's revenues has meant that SG Guernsey
has become largely dependent upon financial support from the
Group;
-- as announced in the Company's final results for the year
ended 31 March 2017, the challenging financial position of the
Group has resulted in the Company being in default on its bank
facilities such that the Company was (and continues to be)
dependent upon the ongoing support of its bank;
-- notwithstanding the continuing support of the bank it became
apparent that, given the other cash requirements of the Group, the
Company could no longer continue to fund SG Guernsey.
SG Guernsey's assets primarily consist of GBP12.6 million of
philatelic stock held in Guernsey. It is likely that the joint
administrators will seek to realise the value of this stock in
order to make a distribution to the creditors of SG Guernsey.
The outstanding indebtedness currently owed to the Group by SG
Guernsey amounts to approximately GBP6.5 million and the Group will
rank as an unsecured creditor in respect of that amount alongside
other unsecured creditors of SG Guernsey.
Whilst the Board of the Company is disappointed that it has not
been possible to avoid the administration of SG Guernsey, it has
concluded that the Administration Order serves the wider interests
of the Company and its shareholders, given that the effect is to
ring-fence the Group's exposure to SG Guernsey's liabilities.
Following the granting of the Administration Order, it has
become the responsibility of the joint administrators to establish
the creditors of SG Guernsey, including the above indebtedness to
Group, and to make a distribution to them from the asset
realisations. The joint administrators will shortly be contacting
the holders of the investment products and the board of the Company
intends to offer such assistance as it is able.
Outlook
The Company and its other operating subsidiaries are not in
administration and continue to trade in the normal course. As
detailed over various announcements, the board of the Company has
focused on a restructuring of the business by stripping out costs
and realising non-core assets to pay down debt - a task to which
the board remains committed. Total monthly employment costs,
anticipated as at January 2018, will have fallen by some 75% since
January 2016, and will represent what the Company believes to be a
stabilised position.
At the heart of the Group are two market leading brands and a
core stamp and coin dealing business consisting of a team with
invaluable industry expertise. In January 2017, Baldwins launched a
joint-venture with St James' for its numismatic auction activities,
and continues to trade profitably with a favourable outlook. The
philatelic business has been affected by the ongoing restructuring,
the build-up of excess inventory from the buy-backs and the
continuing working capital constraints. The measures announced
today will fundamentally limit the exposure of the Group to the
buy-back liabilities and remove the cash-flow burden associated
therewith. Furthermore the Board considers the successful
refocusing of Baldwins a useful capital light template as to the
options open to the Company for an enhanced retail/auction model
for the larger philatelic activities.
In keeping with this focus, Stanley Gibbons has secured the
services of Guy Croton as Managing Director of Philately. Guy is
well respected following a 22 year career in the industry, the last
15 years at Spink, latterly as Head of The Philatelic Division.
While current trading is subdued, the Company remains in default
under its banking facilities. However the Company is in
constructive dialogue with the bank in relation to its ongoing
financing.
Enquiries:
The Stanley Gibbons Group plc
Harry Wilson +44 (0)207 836
Andrew Cook 8444
finnCap Ltd (Nomad and Broker)
Stuart Andrews / Christopher Raggett +44 (0)20 7220
/ Anthony Adams (corporate finance) 0500
Yellow Jersey PR (Financial PR) +44 (0)7747
Charles Goodwin 788 221
stanleygibbons@yellowjerseypr.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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